Outlook Poor for ACA Marketplace Bill

Rich Daly, HFMA senior writer/editor

Even if Republican and Democratic committee leaders reach a deal in the Senate, some doubt other Republicans would provide enough support to pass it.

Sept. 28—Healthcare industry analysts are pessimistic that Congress will clear a bipartisan bill to stabilize the government-run health insurance marketplaces.

Despite the withdrawal of a Republican bill this week to overhaul the Affordable Care Act (ACA) and the renewal of a bipartisan push to enact a limited stabilization package for the individual-insurance marketplaces, policy watchers see plenty of reason for doubt.

Enactment of such a package “is looking like an uphill climb right now,” Geoff Manville, principal and leader of the government relations team at Mercer, said in a web briefing.

The outlook is based on a continued divide between Democrats who seek more funding without substantial changes to the ACA—particularly with respect to its insurance rules and protections—and Republicans who want changes to the rules and protections without new funding.

The sour outlook for enactment of a stabilization package followed the announcement by Sen. Lamar Alexander (R-Tenn.) that he was restarting bipartisan negotiations on a deal in the days after a GOP effort to overhaul the ACA collapsed.

“I will consult with Senator [Patty] Murray [D-Wash.] and with other senators, both Republicans and Democrats, to see if senators can find consensus on a limited bipartisan plan that could be enacted into law to help lower premiums and make insurance available to the 18 million Americans in
the individual market in 2018 and 2019,” Alexander said in a Sept. 26 statement.

Alexander previously was aiming to clear a deal through Congress by Sept. 29—the due date for insurers to sign contracts on plans sold through the federally operated ACA marketplace.

But even if Alexander and Murray reach a deal, some doubt other Republicans would provide enough support to pass it.

“Even if they were to agree, I’m not sure it gets through the Senate, much less the House,” said John McDonough, DrPH, professor of the Practice of Public Health at the Harvard T.H. Chan School of Public Health. “We’re into a dangerous stalemate.”

Republican pushback on any stabilization deal is expected to be especially sharp in the House of Representatives, given that it passed an ACA-overhaul bill and some members remain bitter at Senate Republicans for failing to do so.

“It doesn’t seem likely that [House Republicans] would now pass a bill that shores up the ACA without getting some meaningful changes in return,” Manville said.

Such changes are needed, said Robert Moffit, PhD, senior fellow at the Heritage Foundation, because without them a stabilization package would not reduce costs for the 10 million individual-market enrollees who receive no subsidies for ACA-marketplace or off-exchange plans.

“The potential deal here is: Are the Democrats willing to give the states the kind of regulatory flexibility they need to reduce the costs for their citizens,” Moffit said. “The people who are not in the exchanges and not getting the subsidies are the people who are getting
hammered—hammered—by massive premium increases and frankly crazy deductibles.”

Average 2017 deductibles in ACA Silver plans were $3,703 for individuals and $6,528 for family coverage, according to an Avalere
analysis. The average premium increase was 25 percent in 2017 and is expected to rise to 36 percent in 2018, according to
projections by acasignups.net.

A possible return of a GOP bill to overhaul of the ACA is another development that could complicate passage of a bipartisan stabilization package, policy watchers said.

Possible Deal

Although not yet released publicly, elements of the marketplace stabilization package are expected to include appropriation of cost-sharing reduction (CSR) payments to lower out-of-pocket costs for those earning up to 250 percent of the federal poverty level, alternatives to the
individual mandate, and an option to purchase plans using health savings accounts, according to Sheila Burke, chair of the government relations and public policy group at Baker Donelson.

The key area of conflict over flexibility in state insurance rules relates to the ACA’s 1332 waivers, which authorize only limited changes for states . For instance, no such changes can result in reduced coverage, increased cost, or less comprehensive coverage, according to ACA requirements.

Other elements of the stabilization package could include an option for all enrollees—not just young adults up to 30—to purchase a catastrophic “Copper” plan in the marketplaces, and the development of a federal-state reinsurance program, according to Manville.

However, Manville warned that the reinsurance program could prove difficult to include because “Alexander—and Republicans generally—aren’t really keen on providing more dollars for the ACA.”

Burke sees a deal on flexibility as possible.

“They’ll be looking at whether that essentially provides some reassurance to the Republicans while still some protections for Democrats who are concerned about the guardrails for coverage,” Burke said.

Although a deal on state flexibility is possible, Moffit said achieving it will be “rough stuff.”

Another possibility is that President Donald Trump could strike a deal on a stabilization package with Democrats, as he did on extending the debt ceiling—and as he indicated was possible this week, Manville said. However, that outcome appears the least likely, he added.

“That’s not crazy; that’s quite possible,” Moffit said.

Other Help

Continued pressure from governors may help pave the way for a bipartisan deal. The National Governors Association (NGA) this week urged Congress to prioritize the immediate stabilization of the insurance markets.

A bipartisan group of five governors testified earlier in September on three essential market-stabilization actions: CSR payment funding, a federal-state reinsurance program, and waiver changes.

“Streamline the Section 1332 state innovation waiver process, reducing the cumbersome requirements at the state level to apply and broadening the flexibilities that states may access,” the NGA urged.

If Congress manages to pass a stabilization package, McDonough was optimistic it would improve enrollment, insurance options, and affordability in the individual market.

“It’s pretty clear we don’t need a new car; we can make this car work,” said McDonough, who previously served as executive director of Health Care for All, which advocates for universal coverage.

Another area that might produce bipartisan agreement in the coming months, according to Moffit, is the elimination of ACA taxes on medical devices, high-cost insurance plans (i.e., the Cadillac tax), and drugs. Policy experts on both ends of the political spectrum also have urged repeal of the
ACA’s employer mandate.

However, if the bipartisan stabilization deal ultimately fails, Moffit predicted “parliamentary guerrilla warfare,” in which Republicans would use any opportunity to attack provisions of the ACA.

“They will use the appropriations process, the budget process, they will use program authorizations, reauthorizations—and believe me, in the Senate they have a lot of flexibility to do this—so I think Democrats will be on defense on this issue over the next two years,” Moffit said.

Even if Republican and Democratic committee leaders reach a deal in the Senate, some doubt other Republicans would provide enough support to pass it.

Sept. 28—Healthcare industry analysts are pessimistic that Congress will clear a bipartisan bill to stabilize the government-run health insurance marketplaces.

Despite the withdrawal of a Republican bill this week to overhaul the Affordable Care Act (ACA) and the renewal of a bipartisan push to enact a limited stabilization package for the individual-insurance marketplaces, policy watchers see plenty of reason for doubt.

Enactment of such a package “is looking like an uphill climb right now,” Geoff Manville, principal and leader of the government relations team at Mercer, said in a web briefing.

The outlook is based on a continued divide between Democrats who seek more funding without substantial changes to the ACA—particularly with respect to its insurance rules and protections—and Republicans who want changes to the rules and protections without new funding.

The sour outlook for enactment of a stabilization package followed the announcement by Sen. Lamar Alexander (R-Tenn.) that he was restarting bipartisan negotiations on a deal in the days after a GOP effort to overhaul the ACA collapsed.

“I will consult with Senator [Patty] Murray [D-Wash.] and with other senators, both Republicans and Democrats, to see if senators can find consensus on a limited bipartisan plan that could be enacted into law to help lower premiums and make insurance available to the 18 million Americans in
the individual market in 2018 and 2019,” Alexander said in a Sept. 26 statement.

Alexander previously was aiming to clear a deal through Congress by Sept. 29—the due date for insurers to sign contracts on plans sold through the federally operated ACA marketplace.

But even if Alexander and Murray reach a deal, some doubt other Republicans would provide enough support to pass it.

“Even if they were to agree, I’m not sure it gets through the Senate, much less the House,” said John McDonough, DrPH, professor of the Practice of Public Health at the Harvard T.H. Chan School of Public Health. “We’re into a dangerous stalemate.”

Republican pushback on any stabilization deal is expected to be especially sharp in the House of Representatives, given that it passed an ACA-overhaul bill and some members remain bitter at Senate Republicans for failing to do so.

“It doesn’t seem likely that [House Republicans] would now pass a bill that shores up the ACA without getting some meaningful changes in return,” Manville said.

Such changes are needed, said Robert Moffit, PhD, senior fellow at the Heritage Foundation, because without them a stabilization package would not reduce costs for the 10 million individual-market enrollees who receive no subsidies for ACA-marketplace or off-exchange plans.

“The potential deal here is: Are the Democrats willing to give the states the kind of regulatory flexibility they need to reduce the costs for their citizens,” Moffit said. “The people who are not in the exchanges and not getting the subsidies are the people who are getting
hammered—hammered—by massive premium increases and frankly crazy deductibles.”

Average 2017 deductibles in ACA Silver plans were $3,703 for individuals and $6,528 for family coverage, according to an Avalere
analysis. The average premium increase was 25 percent in 2017 and is expected to rise to 36 percent in 2018, according to
projections by acasignups.net.

A possible return of a GOP bill to overhaul of the ACA is another development that could complicate passage of a bipartisan stabilization package, policy watchers said.

Possible Deal

Although not yet released publicly, elements of the marketplace stabilization package are expected to include appropriation of cost-sharing reduction (CSR) payments to lower out-of-pocket costs for those earning up to 250 percent of the federal poverty level, alternatives to the
individual mandate, and an option to purchase plans using health savings accounts, according to Sheila Burke, chair of the government relations and public policy group at Baker Donelson.

The key area of conflict over flexibility in state insurance rules relates to the ACA’s 1332 waivers, which authorize only limited changes for states . For instance, no such changes can result in reduced coverage, increased cost, or less comprehensive coverage, according to ACA requirements.

Other elements of the stabilization package could include an option for all enrollees—not just young adults up to 30—to purchase a catastrophic “Copper” plan in the marketplaces, and the development of a federal-state reinsurance program, according to Manville.

However, Manville warned that the reinsurance program could prove difficult to include because “Alexander—and Republicans generally—aren’t really keen on providing more dollars for the ACA.”

Burke sees a deal on flexibility as possible.

“They’ll be looking at whether that essentially provides some reassurance to the Republicans while still some protections for Democrats who are concerned about the guardrails for coverage,” Burke said.

Although a deal on state flexibility is possible, Moffit said achieving it will be “rough stuff.”

Another possibility is that President Donald Trump could strike a deal on a stabilization package with Democrats, as he did on extending the debt ceiling—and as he indicated was possible this week, Manville said. However, that outcome appears the least likely, he added.

“That’s not crazy; that’s quite possible,” Moffit said.

Other Help

Continued pressure from governors may help pave the way for a bipartisan deal. The National Governors Association (NGA) this week urged Congress to prioritize the immediate stabilization of the insurance markets.

A bipartisan group of five governors testified earlier in September on three essential market-stabilization actions: CSR payment funding, a federal-state reinsurance program, and waiver changes.

“Streamline the Section 1332 state innovation waiver process, reducing the cumbersome requirements at the state level to apply and broadening the flexibilities that states may access,” the NGA urged.

If Congress manages to pass a stabilization package, McDonough was optimistic it would improve enrollment, insurance options, and affordability in the individual market.

“It’s pretty clear we don’t need a new car; we can make this car work,” said McDonough, who previously served as executive director of Health Care for All, which advocates for universal coverage.

Another area that might produce bipartisan agreement in the coming months, according to Moffit, is the elimination of ACA taxes on medical devices, high-cost insurance plans (i.e., the Cadillac tax), and drugs. Policy experts on both ends of the political spectrum also have urged repeal of the
ACA’s employer mandate.

However, if the bipartisan stabilization deal ultimately fails, Moffit predicted “parliamentary guerrilla warfare,” in which Republicans would use any opportunity to attack provisions of the ACA.

“They will use the appropriations process, the budget process, they will use program authorizations, reauthorizations—and believe me, in the Senate they have a lot of flexibility to do this—so I think Democrats will be on defense on this issue over the next two years,” Moffit said.

HFMA RESOURCE LIBRARY

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